Fogo Island Inn is a social business first
18 SEPTEMBER 2015 8:24 AM
The inn, located on Canada’s east coast, looks to the social aspect of business over the monetary returns.
Far away from far away lies one of the most interesting resort experiences on the planet. Just off the northern shore of Canada’s Newfoundland province (closest airport is Gander, about a three-hour combined ferry-service plus drive) lies pristine Fogo Island and its namesake property.
With incredible contemporary architecture, paying homage to the traditional fishing outport stages of the region, Fogo Island Inn promises a worthwhile adventure to all who journey to this remote part of the globe. The property has been extensively reviewed in most every destination travel publication. With publicity that any hotelier would give his or her eyeteeth for, this is definitely a “bucket list” property for a guaranteed never-been-here travel destination.
But your mind spins for a minute. This is the east coast of Canada, not known for luxury resorts per se, except perhaps those magnificent grande dame Fairmont properties resurrected from the old turn-of-the-century railway masterpieces of the Canadian Pacific empire. How can a property survive the harsh winters with short summer seasons? Under these challenging circumstances, who would make such an investment? What is the rationale?
Since its opening in the summer of 2013, this 29-room and suite property has shown remarkably strong occupancy, with average daily rates that are nothing less than 5-star levels, double anything in the province and perhaps in Canada east of Montreal. There is no revenue management program. Rates are fixed, with the lowest room-only rate being 875 Canadian dollars ($665.70) per night and full board rates starting at CA$1,275 ($970.02) per night. The property is not available through online travel agencies or global distribution systems (traditional travel agent commissions are offered), and there is not even an online booking tool.
Apart from the jaw-dropping architecture, the property provides its guests a host of curated outdoor activities ranging from hiking and boating, to iceberg watching and orientations at the local fisheries. Better yet, with the resort’s “Signature Experiences,” guests can let their whole days be planned out for them with excellent food and beverage as an accompaniment, of course.
Fogo Island Inn is the exception, not the rule, but that doesn’t mean there isn’t learning here for all resorts, and all hoteliers for that matter. And surprisingly, the real story is more about the community than the incredible property itself.
To explain, I’ve recruited the property’s founding innkeeper, Zita Cobb, to shed some light on the property’s origins and how it functions.
Mogelonsky: Let’s start with a brief overview of the Fogo Island Inn.
Cobb: “I am an eighth-generation Fogo Islander, and I grew up in Fogo Island’s fishing community of Joe Batt’s Arm, though I left to study business in my teens. Fogo Island’s economy suffered greatly as the cod fishery declined in the latter decades of the 20th century. After retiring from my business career and returning home in the early 2000s, I recognized the need for action to help keep Fogo Island economically viable, and founded the Shorefast Foundation with my brothers Alan and Anthony.
“The Fogo Island Inn was our biggest undertaking to date. The inn is a social business, meaning that 100% of operating surpluses are reinvested in the community through the Shorefast Foundation, and there are no investors seeking a return on their investment. The focus of the inn, therefore, is as a charitable venture.”
Mogelonsky: Tell us more about the Shorefast Foundation.
Cobb: “The foundation was established in 2003 by Anthony, Alan and myself. We wanted to help resuscitate Fogo Island’s rich culture and its economy. Recognizing that traditional charity in the form of monetary handouts would not contribute to long-term cultural, social and economic resiliency for Fogo Island, our goal was to leverage an initial investment to create culturally rich and community-owned assets. The guiding principle of the foundation is that nature and culture are the two great garments of human life, and business and technology are the two great tools that can and should serve them.”
Mogelonsky: A number of people have commented to me that you can only do this because you are independently wealthy. I believe that, first, there are many wealthy hotel owners, and second, that you do this because you have the community at heart.
Cobb: “Having ready access to financial capital is certainly helpful for any project. But it is far from being the most important thing. Lots of people do ambitious projects when they themselves don’t have access to capital; they go out and find it.
“To me, the most important things are community and the relationship between capital and community—between capital and place itself. I think the most important assets my brothers and I bring to our projects on Fogo Island is a love of place and a feeling of responsibility toward the nature and culture of that place. I’d say the second most important asset we bring is a willingness to commit our lives to what we believe.
“To be clear, the Fogo Island Inn is a business; it is a social business. We do worry about returns, just as every business does. The difference in our case is that the returns are not private returns; they are public returns. That doesn’t make them less important—it makes them more important.
“Business itself, and the way we use it, is changing. ‘Traditional’ business was more focused strictly on financial returns. Contemporary business, and certainly the business of the future, will also be focused on ecological and social returns, which means that business (as a tool) will be increasingly used as a means to tackle seemingly intractable problems. That’s the nature of social business.”
Mogelonsky: Who makes the decisions?
Cobb: “The Shorefast team includes our executive director, Allison Kouzovnikov, and a small group of other deeply committed employees. They make certain decisions in the normal course of their Shorefast work. Further reaching decisions are made by the 10-person Board of Directors of Shorefast.
“The inn is operated by a business trust (which has trustees for oversight). The inn is a separate organization led by me as innkeeper and Steven Cannizzaro, our general manager. Steve and his team make the normal day-to-day decisions that come up in the course of running the inn. Of course, Shorefast and inn decisions are all made with the well-being of the wider community of Fogo Island in mind.”
Mogelonsky: How can another property emulate your success?
Cobb: “Any property can become a social business. It doesn’t need to be done by establishing a foundation, although that is one possible structure. Any property owner can decide to share a portion of the business or the returns from the business with the community it operates in. Any property can bring members of that community onto its board of directors. Any property can add a mandate to contribute to the ecological and social sustainability of the community it operates in. In fact, many properties are doing this already and doing it well. There is no magic in our model; what sets us apart is that we are a 100% social business.”
Mogelonsky: What is the guest feedback like?
Cobb: “Our guests leave part of themselves in the fabric of Fogo Island when they go. And, for sure, a little piece of Fogo Island lives inside of them. Many return. It’s probably best to read some of their own accounts on the various online platforms.”
Larry Mogelonsky (email@example.com) is the founder of LMA Communications Inc. (www.lma.ca), an award-winning hospitality marketing agency. He’s also a member of Cayuga Hospitality Consultants, G7 Hospitality and Laguna Strategic Advisors. He has published three books including “Are You an Ostrich or a Llama?”, “Llamas Rule” and “Hotel Llama”.
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